5387. MONEY, Standard.—
I believe all
the countries in Europe determine their standard
of money in gold as well as silver.
Thus, the laws of England direct that a
pound Troy of gold, of twenty-two carats
fine, shall be cut into forty-four and a half
guineas, each of which shall be worth twenty-one
and a half shillings, that is, into 956 3-4
shillings. This establishes the shilling at
5.518 grains of pure gold. They direct that
a pound of silver, consisting of 11 1-10 ounces
of pure silver and 9-10 of an ounce alloy,
shall be cut into sixty-two shillings. This
establishes the shilling at 85.93 grains of
pure silver, and, consequently, the proportion
of gold to silver as 85.93 to 5.518, or as
15.57 to 1. If this be the true proportion
between the value of gold and silver at
the general market of Europe, then the value
of the shilling, depending on two standards,
is the same, whether a payment be made
in gold or in silver. But if the proportion
of the general market at Europe be as fifteen
to one, then the Englishman who
owes a pound weight of gold at Amsterdam,
if he sends the pound of gold
to pay it, sends 1043.72 shillings; if he sends
fifteen pounds of silver, he sends only 1030.5
shillings; if he pays half in gold and half in
silver, he pays only 1037.11 shillings. And
this medium between the two standards of
gold and silver, we must consider as furnishing
the true medium value of the shilling. If
the parliament should now order the pound
of gold (of one-twelfth alloy as before) to
be put into a thousand shillings instead of
nine hundred and fifty-six and three-fourths,
leaving the silver as it is, the medium or true
value of the shilling would suffer a change
of half the difference; and in the case before
stated, to pay a debt of a pound weight of
gold, at Amsterdam, if he sent the pound
weight of gold, he would send 1090.9 shillings;
if he sent fifteen pounds of silver, he
would send 1030.5 shillings; if half in gold
and half in silver, he would send 1060.7
shillings; which shows that this parliamentary
operation would reduce the value of the
shilling in the proportion of 1060.7 to 1037.11.—
To J. Sarsfield. Washington ed. iii, 18.
(P.
April. 1789)
